2/21. House Democrats and Republicans continued to posture, and
assign blame, regarding electronic surveillance and legislation to revise the
Foreign Intelligence Surveillance Act (FISA).

S 1927 [LOC |
WW], the
"Protect America Act", the temporary act enacted in August of 2007 to
revise and expand federal wiretap, surveillance, and related authorities,
expired on Saturday, February 16, 2008.

Rep. Steny Hoyer (D-MD), the
House Majority Leader, stated in a
release on
February 21, 2008, that "I am disappointed that House and Senate Republicans apparently
instructed their staffs not to participate in today’s bicameral meeting on modernizing the
Foreign Intelligence Surveillance Act. The decision to not participate, coupled with their
vote against an extension of their bill -- the Protect America Act -- only serves to reinforce
the perception that Republicans prefer to have a political issue rather than a strong new FISA
bill in place as quickly as possible. Certainly Republicans do not really believe that the role
of the House is to simply rubberstamp whatever bills the Senate passes."

He added that "I am hopeful that Republicans will reconsider and join us in crafting a
bipartisan FISA bill that protects our nation and our civil liberties. It is time to come
together and work in the best interests of our nation’s security."

Rep. Roy Blunt (R-MO) stated in
a release that "Democrats are saying today's meeting was called to craft
bipartisan legislation that would update our antiquated foreign intelligence
laws. This meeting was nothing more than an attempt to give the majority
political cover for irresponsibly allowing the Protect America Act to expire.
We already have a bi-partisan bill that was supported by more than two-thirds of
the Senate and enjoys the support of a majority of Members of the House. The
only remaining issue is how long House Democrat Leadership will delay before
scheduling this bi-partisan bill for a vote."

He added that "House Democrats
have had ample time. Now, I’m asking them to listen to a respected member of
their own party and pass the bill Senator Jay Rockefeller and my good friend Kit
Bond wrote -- and 66 of their Senate colleagues supported."

7th Circuit Addresses Meaning of Prevailing
Party under Section 505 of Copyright Act

2/20. The U.S. Court of Appeals (7thCir) issued
its opinion in Riviera Distributors v. Midwest Electronic Specialties, a software
source code copyright infringement action in which the issue is whether the defendant is
entitled to recover attorneys fees as the prevailing party pursuant to
17 U.S.C. § 505 when the case is dismissed, but not on the merits.

The Court of Appeals, reversing the District Court, held that the defendant is the
prevailing party within the meaning of Section 505 and is entitled to attorneys fees.

Riviera Distributors, Inc. and Larry Hartley filed a complaint in U.S. District Court
(CDIll) against Timothy Jones and Midwest Electronic Specialties, Inc. alleging copyright
infringement in connection with the source code for a video poker game.

After a long period of inaction, the plaintiffs filed a motion
to dismiss their complaint, without prejudice, pursuant to Rule 41(a)(2),
Federal Rules of Civil Procedure. The District Court dismissed, but with
prejudice. The defendants then sought an award of attorneys fees under Section 505.

The District Court denied the motion, because it "did not in any way pass on the
merits of the litigation". The defendants brought the present appeal.

Section 505 provides in full that "In any civil action under this title, the
court in its discretion may allow the recovery of full costs by or against any
party other than the United States or an officer thereof. Except as otherwise
provided by this title, the court may also award a reasonable attorney’s fee to
the prevailing party as part of the costs."

See also, the Supreme Court's 1994
opinion in Fogarty v. Fantasy, which is also reported at 510 U.S. 517.

The Court of Appeals reversed.

It wrote that "Midwest obtained a favorable judgment. That this
came about when Riviera threw in the towel does not make Midwest less the victor
than it would have been had the judge granted summary judgment or a jury returned a verdict
in its favor. Riviera sued; Midwest won; no more is required."

It wrote that the District Court's "approach supposes that the content of a
judge's opinion is what makes a litigant a prevailing party", but Supreme Court
precedent provides that a litigant prevails for the purpose of a fee shifting
statute when it obtains a material alteration of the legal relationship of the parties.

The Court of Appeals also noted that "a consent decree confers prevailing-party status
even though everyone denies liability as part of the underlying settlement, and the judge takes
no position on the merits."

However, there were facts in this case that might be used to distinguish it
from other Section 505 cases involving dismissals without determinations on the
merits. The Court of Appeals wrote that "What remains is the question whether
this is an appropriate occasion for fee shifting." It held that it is, but in
part because this case "was filed in the teeth of an agreement not to sue" that
was negotiated after related litigation between the same parties. That agreement
provided for an alternative method of dispute resolution.

Hence, the Court of Appeals concluded
that "Riviera came to the wrong forum. Agreements such as the one between Riviera and
Midwest are designed to reduce the price tag of decision-making. By filing another suit, Riviera
forced Midwest to bear the very expenses that the parties had agreed to avoid. The party
responsible for creating excessive legal costs must bear them itself in the end."

This case is Riviera Distributors, Inc. and Larry Hartley v. Timothy Jones and Midwest
Electronic Specialties, Inc., U.S. Court of Appeals for the 7th Circuit, App. Ct. Nos.
06-2043 and 06-3692, appeals from the U.S. District Court for the Central District of Illinois,
D.C. No. 04-1430, Judge Michael Mihm presiding. Judge Frank Easterbrook wrote the opinion of
the Court of Appeals, in which Judges Ripple and Kanne joined.

Introduction. Markey wrote in a
statement that "The goal of this bipartisan legislation is to assure consumers,
content providers, and high tech innovators that the historic, open architecture nature of the
Internet will be preserved and fostered. H.R. 5353 is designed to assess and promote
Internet freedom for consumers and content providers."

Markey (at right) continued that
"Internet freedom generally embodies the notion that consumers and content providers
should be free to send, receive, access and use the lawful applications, content, and services
of their choice on broadband networks, possess the effective right to attach and use non-harmful
devices to use in conjunction with their broadband services, and that content providers not be
subjected to unreasonably discriminatory practices by broadband network providers."

The bill would do two things. First, it would amend the Communications Act of
1934 to state that "It is the policy of the United States" to maintain freedom
to use broadband networks "without unreasonable interference from or
discrimination by network operators", and to preserve and promote the open and
interconnected nature of broadband networks. However, the bill does not set
forth what the meaning or legal consequences of a policy statement is.

Second, the bill would require the FCC to conduct a study of broadband
networks and services. While this is only a study, its findings might serve as
the basis for future legislation. Also, it is notable that the bill would
require the FCC go beyond its usual notice and comment procedure. The bill would
require the five Commissioners to hold "summits" around the country.

Legislative History. Rep. Markey has been trying to get a network neutrality bill
through the Congress for years. His previous proposals would have imposed mandates upon service
providers. For example, he offered a network neutrality amendment during the Subcommittee markup
of the telecommunications reform bill on April 5, 2006. It failed. He offered another amendment
at the April 26 full Committee mark up. It failed. He offered an amendment during floor
consideration. It failed by a vote of 152-269. See,
Roll Call No. 239. Republicans voted
11-211. Democrats voted 140-58. The House passed a bill that summer, but without a network
neutrality mandate. The Senate did not pass the bill, and it lapsed at the end of the 109th
Congress.

TLJ published an article at the beginning of the 110th Congress arguing,
based upon an analysis of the membership of the House, the
House Commerce Committee (HCC),
and its Subcommittee on Telecommunications and the Internet, that "it is
unlikely that a hard network neutrality mandate, such as those voted upon in the
109th Congress, and the recently introduced
S 215, the
``Internet Freedom Preservation Act´´, could be approved by either the HCC or by
the House, despite the change of party control and new members." See, story
titled "Analysis of Support for a Network Neutrality Mandate in the House and
Senate" in TLJ
Daily E-Mail Alert No. 1,532, February 5, 2007.

Perhaps it is Rep. Markey's hope that by introducing a bill with a policy
statement, rather than hard mandates for broadband service providers, his bill
can win enough support for passage.

Bill Summary. Section 1 of the bill only provides its title.

Section 2 is a short and insignificant recitation of findings. That is, the
Congress finds that the internet has "profound benefits" and is "vital to the
economy", and that therefore, broadband markets should be studied.

Section 3 contains the policy statement. It begins: "Title I of the
Communications Act of 1934 (47 U.S.C. 151 et seq.) is amended by adding at the
end the following new section ..."

47 U.S.C. § 151 merely creates the FCC, and contains a very short and broad statement of the
"purpose" in creating
the FCC, namely, "to make available, so far as possible, to all the people of the
United States, without discrimination on the basis of race, color, religion,
national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire
and radio communication service with adequate facilities at reasonable charges,
for the purpose of the national defense, for the purpose of promoting safety of
life and property through the use of wire and radio communications".

Section 151 and other sections make up Title I of the Communications Act.
For example, there are also sections containing definitions, the composition and
qualifications requirements for the Commission, duties of Commissioners, FCC
staff, and related matters.

Title I does not pertain to any industry sector in the manner that, for
example, Title II pertains to telecommunications. Nevertheless, the FCC acts as
though Title I is a regulatory category that covers, among other things,
information services. It also asserts an authority, arising under Title I, which
it titles "ancillary jurisdiction".

The FCC has declared that broadband internet access services provided via
cable modem, DSL, fiber optic cable, broadband wireless, and other platforms are
Title I information services. Hence, they are not subject to Title II
telecommunications regulations. However, the FCC has applied some components of
the Title II telecommunications regime, such as 911/E911 and CALEA, to certain
services that it has classified at Title I services, sometimes but not always
under an ancillary jurisdiction argument.

The policy statement of this bill builds upon the Title I regulatory regime.
Perhaps it is Rep. Markey's intent that this policy statement is a Congressional
equivalent of an FCC declaratory ruling regarding regulation of Title I
broadband services. Perhaps it is Rep. Markey's intent to clarify that the FCC
possesses ancillary jurisdiction to regulate Title I broadband services, and to
specify the parameters of that regulatory regime.

Nevertheless, the bill does not expressly require the FCC to conduct a
rulemaking proceeding.

Specifically, the bill states that

"It is the policy of the United States--
(1) to maintain the freedom to use for lawful purposes broadband telecommunications
networks, including the Internet, without unreasonable interference from or discrimination by
network operators, as has been the policy and history of the Internet and the basis of user
expectations since its inception;
(2) to ensure that the Internet remains a vital force in the United States economy, thereby
enabling the Nation to preserve its global leadership in online commerce and technological
innovation;
(3) to preserve and promote the open and interconnected nature of broadband networks that
enable consumers to reach, and service providers to offer, lawful content, applications, and
services of their choosing, using their selection of devices, as long as such devices do not
harm the network; and
(4) to safeguard the open marketplace of ideas on the Internet by adopting and
enforcing baseline protections to guard against unreasonable discriminatory
favoritism for, or degradation of, content by network operators based upon its
source, ownership, or destination on the Internet."

The bill then directs that the FCC "shall" begin a report writing
proceeding within 90 days "on broadband services and consumer rights".

The bill provides that in this proceeding, the FCC "shall assess ... whether
broadband network providers adhere to the Commission’s Broadband Policy
Statement of August, 2005".

The 2005 FCC policy statement provides that "consumers are
entitled to access the lawful Internet content of their choice ... consumers are
entitled to run applications and use services of their choice, subject to the
needs of law enforcement ... consumers are entitled to connect their choice of
legal devices that do not harm the network ... consumers are entitled to
competition among network providers, application and service providers, and
content providers."

While there are similarities between the bill's policy statement
and the 2005 policy statement, there are also differences. The fourth item from
the 2005 policy statement is entirely missing from Rep. Markey's bill. Also,
Rep. Markey's bill would go further in regulating service providers' management
of their networks, and impose a nondiscrimination requirement.

In conducting this study, the bill further specifies that the FCC shall consider
"whether, consistent with the needs of law enforcement, such providers refrain from
blocking, thwarting, or unreasonably interfering with the ability of consumers to -- (i)
access, use, send, receive, or offer lawful content, applications, or services over broadband
networks, including the Internet; (ii) use lawful applications and services of their choice;
and (iii) attach or connect their choice of legal devices to use in conjunction with
their broadband telecommunications or information services, provided such
devices do not harm the network".

It also requires that the FCC consider "whether broadband network providers add charges
for quality of service, or other similar additional fees or surcharges, to certain Internet
applications and service providers, and
whether such pricing conflicts with the policies" set forth in the bill.

It also requires that the FCC consider "whether broadband network providers
offer to consumers parental control protection tools, services to combat
unsolicited commercial electronic mail, and other similar consumer services ..."

It also requires that the FCC consider "practices by which network providers
manage or prioritize network traffic, including prioritization for emergency
communications, and whether and in what instances such practices" are consistent
with the policies set forth in the bill.

It also requires that the FCC consider "with respect to content,
applications, and services ... the historic economic benefits of an open
platform" and "the relationship between competition in the broadband Internet
access market and an open platform ..."

It also requires the FCC to examine the "need for enforceable rules".

Next, the bill requires the "Commission" to conduct "a minimum of 8 public
broadband summits, in geographically diverse locations". The "Commission",
within the meaning of
47 U.S.C. § 155, is the five members appointed by the President and confirmed by the
Senate. That is, the Commission cannot delegate this function to FCC staff.

While the FCC and many other federal commissions and agencies hold workshops
or summits in some of their proceedings, and commissioners and agency heads
sometimes attend part or all of these events, this is discretionary, and not
pursuant to statutory mandate.

This represents a departure from the FCC's Washington DC focused practices, that
rely upon notice and comments, as well as non-transparent processes,
including ex parte meetings and communications and closed FCBA meetings.

Reaction. Gigi Sohn, head of the
Public Knowledge, stated in a
release that this bill
"properly captures the broad policy that would ensure that open, free and
accessible Internet we have known for years will continue to be open to
innovation, free from the control of telephone and cable companies and accessible to everyone.
The studies and public meetings ... will be helpful tools in making certain the essential
character of the Internet does not change."

In contrast, Steve Largent, head of the
Cellular Telecommunications Industry Association (CTIA), stated in a
release that this bill
"is an attempt to cure a problem that simply does not exist. Overwhelming evidence
collected by the Federal Communications Commission, the Federal Trade Commission, and
independent research analysts proves that wireless broadband adoption is spreading like
wildfire across this country. This wouldn't be happening if consumers weren't getting the
service, value, and access to content they desire."

He argued that "government intervention is not necessary."

Walter McCormick, head of the U.S.
Telecom Association, stated in a
release that "This legislation is
antithetical to the Congressional innovation agenda goals of extending broadband's reach, and
speeding delivery of advanced applications that will improve the environment, personal
security, education, and health care -- particularly in rural areas."

McCormick continued that this bill "would blindly legislate a new national broadband
policy, without regard to its implications, and then require the FCC to spend the next year
determining whether the Internet is being constructed, managed, and operated in conformance
with this new government mandate. We urge Congress to remain focused on its innovation agenda
goal of encouraging broadband deployment and refrain from federal micro-management of the most
dynamic and technologically sensitive sector of our nation’s economy."

Rep. Markey attempted to minimize perceptions of the legal significance of a
statutory statement of policy. He wrote in a
release that "There are some who may wish to assert that this bill regulates
the Internet. It does no such thing. The bill contains no requirements for
regulations on the Internet whatsoever."

In contrast, one of the bill's leading backers, Markham Erickson of the
Open Internet Coalition, stated in a
release that this bill "will make Net Neutrality
the law of the land, and will require the FCC to protect Internet freedom from
the predatory efforts of the telco and cable gatekeepers."

Randy May, head of the Free State
Foundation, and a longtime opponent of network neutrality mandates, wrote in an
essay [4 pages in PDF] on the bill that "This policy declaration would
reverse the Supreme Court's Brand X decision affirming the FCC's 2002
determination not to regulate broadband operators as common carriers."

May added that "By embracing the no-discrimination mandate, a core common
carriage requirement, the Markey bill would declare it now to be the policy of
the U.S. that broadband operators be regulated like public utility common
carriers."

On June 27, 2005, the Supreme Court
issued its
opinion [59 pages in PDF] in NCTA v. Brand X, upholding the FCC's
determination that cable broadband internet access service is an information
service, and reversing the judgment of the
U.S. Court of Appeals (9thCir).

The Supreme Court overturned the 2003
opinion
[39 pages in PDF] of the 9th Circuit, which vacated the FCC's 2002
Declaratory Ruling [75 pages in PDF] which concluded that cable modem
service is an information service, and that there is no separate offering as a
telecommunications service.

Statement of Policy? This bill would provide that "It is the policy of the
United States ...". It does not explain what this means.

Many bills contain recitations of findings. Sometimes these findings state
what policy should be. These findings are then relegated to footnotes in
codifications of law, and are often ignored by agencies and courts. But, this bill
contains both a findings section, and a policy statement.

The bill does not state whether or not the FCC is either bound to adhere to, enforce, or
implement a policy statement. The bill does not state what are the consequences if the FCC does
not follow, enforce or implement any part of the statement of policy.

For example, if the FCC issues a final order, such as in granting or denying
a petition for a declaratory ruling, and that order is challenged in court,
would it be sufficient grounds for granting a petition for review that the order
is inconsistent with the statutory policy?

Also, the bill uses the language "policy of the United States", rather
than "policy of the FCC". Thus, the bill is open to the interpretation that
other federal agencies, when considering broadband related issues, are bound by
the policy statement. The Federal Trade Commission (FTC) can be expected to
address many broadband issues in the future. In addition, various sectoral
regulatory agencies may have cause to impose regulatory restraints that affect
broadband internet access, which access may be for lawful purposes. Could the
policy statement of this bill be invoked to bar such efforts?

Washington Tech CalendarNew items are highlighted in red.

Friday, February 22

The House will not meet. It is in recess. See, Rep. Hoyer's
2008
calendar [4.25 MB PDF].

Deadline to submit initial comments to the
Copyright Office (CO) regarding its proposed rules
changes regarding the recordation of notices of termination and related matters. The
CO stated that these proposed changes "would communicate the Office's practices as to
notices of termination that are untimely filed; clarify the fact that a notice of termination
is not legally sufficient simply because it has been recorded; update the legibility
requirements for all recorded documents, including notices of termination; make minor
explanatory edits to the fee schedule for multiple titles within a document (adding notices
of termination as an example); and create a new mailing address to which notices of
termination should be sent." See,
notice in the Federal Register, January 23, 2008, Vol. 73, No.15, at Pages
3898-3900.

Monday, February 25

The House will return from its President's Day Recess. Votes will be
postponed at least until 6:30 PM. See, Rep. Hoyer's
2008
calendar [4.25 MB PDF].

5:00 PM. Deadline to submit applications to
the National Institute of Standards and Technology (NIST)
for Summer Undergraduate Research Fellowships (SURF) in Gaithersburg, Maryland, and
Boulder Colorado. See,
notice in the Federal Register, January 25, 2008, Vol. 73, No. 17, at Pages
4535-4540.

8:30 AM - 5:00 PM. The U.S.-China Economic and Security Review
Commission will hold a public hearing titled "China's Views of Sovereignty and Methods
of Access Control". The hearing will also address "ways that China may be
influencing the development of international sovereignty laws and norms in space and
cyberspace". See,
notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at
Pages 5631-5632. Location: Room 562, Dirksen Building, Capitol Hill.

10:00 AM. The
House Commerce Committee's (HCC)
Subcommittee on Telecommunications and the Internet will meet regarding "H.R.
__, a Discussion Draft on Wireless Consumer Protection and Community Broadband
Empowerment". This event will be webcast by the HCC. Location: Room 2322,
Rayburn Building.

10:00 AM. The Senate
Judiciary Committee (SJC) may hold an executive business meeting. The agenda includes
consideration of several bills, including S 2449
[LOC |
WW], the
"Sunshine in Litigation Act of 2007", and S 352
[LOC |
WW], the
"Sunshine in the Courtroom Act of 2007". The agenda also includes
consideration of the nominations of Kevin O'Connor (to be Associate Attorney General)
and Gregory Katsas (to be Assistant Attorney General in charge of the Civil Division).
The SJC rarely follows its published agendas. All of the above listed agenda items have been
on prior agendas. See,
notice. Location: Room 226, Dirksen Building.

10:00 AM. The
House Homeland Security Committee (HHSC) will hold a hearing titled "Cyber
Initiative". The witnesses will be Robert Jamison (DHS's Under Secretary
for National Protection and Programs), Scott Charbo (DHS's Deputy Under
Secretary for National Protection and Programs Directorate), Karen Evans
(OMB), and Shawn Henry (FBI's Deputy Assistant Director of the Cyber
Division). This hearing will be webcast by the HHSC. For more information,
contact Dena Graziano or Adam Comis at 202-225-9978. Location: Room 311,
Cannon Building.

2:00 - 3:00 PM. The President's
National Security Telecommunications Advisory Committee (NSTAC) will hold a partially
closed meeting by teleconference. The agenda of the open portion of the meeting, which
begins at 2:00 PM, includes a discussion and vote on the NSTAC's Global Positioning
Systems report. The agenda of the closed portion of the meeting, which begins at
2:30 PM, includes a discussion of the results of the NSTAC's investigation of the
global network infrastructure environment, and a discussion of the work of the NSTAC's
Network Security Scoping Group. See,
notice in the Federal Register, February 4, 2008, Vol. 73, No. 23, at Pages
6521-6522.

Deadline for the Department of Education's National
Mathematics Advisory Panel to submit its final report to the President. See,
notice in the Federal Register, August 20, 2007, Vol. 72, No. 160, at Pages
46452-46453.

Friday, February 29

10:00 AM. Deadline for foreign governments to submit comments to the
Office of the U.S. Trade Representative (OUSTR) to assist
it in making Special 301 identifications of countries that deny adequate and effective
protection of intellectual property rights or deny fair and equitable market access to U.S.
persons who rely on intellectual property protection. See, story titled "OUSTR Seeks
Special 301 Comments on Countries that Deny Adequate IPR Protection" in TLJ Daily E-Mail
Alert No. 1,703, January 22, 2008, and
notice in the Federal Register, January 16, 2008, Vol. 73, No. 11, at Pages 2958-2959.

Deadline to submit comments or objections to the
Copyright Royalty Judges' proposed rules that set the
rates and terms for the making of an ephemeral recording of a sound recording by a
business establishment service for the period 2009-2013. See,
notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at
Pages 5466-5470.

Deadline to submit comments to the
Copyright Royalty Judges
in response to its request for comments regarding controversies at Phase I and Phase II
for distribution of the 1999 through 2005 royalty funds collected under the satellite
carrier statutory license. The deadline to submit comments is February 29, 2008. See,
notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at Page 5597.

Deadline to submit comments to the
Copyright Royalty Judges regarding a motion for partial
distribution funds under the partial Phase I settlement in connection with the 2004 and 2005
cable royalty funds. Comments are due by February 29, 2008. See,
notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at
Pages 5597-5598.

2/19. The Department of Justice (DOJ)
filed a complaint
in U.S. District Court (DC) against
Thomson Corporation and Reuters Group PLC alleging violation of federal
antitrust laws in connection with Thomson's proposed acquisition of Reuters. The
DOJ simultaneously agreed to allow the acquisition, subject to divestitures and
licensing of intellectual property.

The complaint alleges that the relevant markets are fundamentals data, earnings estimates
data, and aftermarket research. It further asserts that the proposed transaction would likely
have resulted in higher prices to purchasers of data used by investment managers, investment
bankers, traders, corporate managers, and other institutional customers.

The complaint alleges that the acquisition would substantially lessen competition in
interstate trade and commerce in violation of Section 7 of the Clayton Act, which is codified at
15
U.S.C. § 18. The complaint requests that the District Court block the transaction.

The DOJ, Thomson and Reuters simultaneously submitted a
proposed Final
Judgment [redacted] that permits the acquisition subject to divestitures of
datasets, and licensing of related intellectual property.

The DOJ's Antitrust Division also stated in a
release
the "remedies contained in the proposed settlement with respect to three
financial data markets are consistent with those obtained as a result of an
antitrust investigation by the European Commission and also announced today".

Thomas Barnett, Assistant Attorney General in charge of the
Antitrust Division, "This resolution by the
Antitrust Division, the European Commission, and the Canadian Competition Bureau is an example
of effective cooperation in global competition enforcement".

Reuters is a UK company based in London. The US and EU regulators do not
always cooperate effectively, or reach similar conclusions, regarding
competition in markets, particularly when the companies involved are all US companies.

This case is U.S.A. v. The Thomson Corporation and Reuters Group PLC, U.S. District
Court for the District of Columbia, D.C. No. 1:08-cv-00262, Judge Thomas Hogan presiding.

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